B.C. reaches tax deal with Airbnb

The B.C. government announced it plans Wednesday to tax Airbnb on short-term rentals and use the anticipated $16 million to fund housing affordability projects.

Airbnb has agreed to begin collecting an eight per cent sales tax (PST) and up to three per cent in a municipal and regional district tax (MRDT) once the B.C. government passes legislation on the new policy, said Finance Minister Carole James.

James said the policy would level the playing field for businesses in the hospitality industry.

Currently, Airbnb does not pay any tax on its transactions in Canada, except a 3.5 per cent lodging tax in Quebec.

The province expects to collect about $16 million from the PST portion and about $5 million through MRDT, through what James called a “unique arrangement.”

The new policy could mean not only more money for governments, but also more data, said one housing expert.

“If they just write a cheque to the province, that’s one thing,” said UBC Sauder School of Business professor Tom Davidoff.

“But if there’s record of an identifier [of the hosts], then that data sharing becomes important.”

He said the data could help governments enforce everything from income taxes to local Airbnb regulations like the ones the City of Vancouver plans to implement later this year.

The city has said it will ban residents from listing secondary properties as short-term rentals; those who want to list their primary properties on platforms like Airbnb must be licenced. People can apply for business licences starting in the spring.

Those kinds of regulations are key if authorities want to counter the negative effects Airbnb have on housing affordability, said Green party leader Andrew Weaver.

“While this announcement is a good first step from a tax fairness perspective, it will not change behaviour or free up long-term rental stock that has been taken out of the market due to short-term rental services.”

Weaver has been calling on the NDP to support local governments to better regulate the short-term rental market.

At least one housing advocate agrees.

“[The tax] doesn’t start to offset the impacts that Airbnb has on the availability of rental housing,” said Karen Sawatsky, an advocate for renters.

“These new disruptors need to pay their share [of taxes], and I think the provincial government is doing their job in that regard. But money isn’t enough.”

The B.C. government and the City of Vancouver both say they hope to see other short-term rental platforms follows Airbnb’s lead to collect provincial taxes.